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news article - UAL/US AIR to be all stock deal...

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Marriott Platinum Member
Dec 2, 2003
UAL labeled as the "acquirer"


NEW YORK (Reuters) - The merger talks between United Airlines (UAUA.O) and US Airways (LCC.N) revolve around doing an all-stock deal, with United paying US Airways shareholders a premium similar to that of the Delta-Northwest (DAL.N) merger, people familiar with the matter said.
Delta, which bought Northwest in 2008, paid Northwest shareholders a 17 percent premium to the closing price on the day before the announcement.
The two sides have been negotiating break-up fees and reverse break-up fees in the 2 to 6 percent range, to be implemented if either side walks away from the deal, the sources said on Friday.
The companies see more than $1 billion in synergies from a potential deal, the sources said. Issues such as management will be discussed in the coming days, but United Airlines would be the continuing brand, the sources said.
A deal could be sealed in a few weeks, the sources said. But they also cautioned that talks could still fall through or that other airlines could approach either United or US Airways.
Both airlines declined to comment.
United Airlines is in merger talks with US Airways for a deal that could create the second-largest carrier in the United States, sources told Reuters earlier this week.
The discussions, aimed at cutting costs and competing with a combined Delta-Northwest, have been going on for months, the sources said.

The airline industry has lost $50 billion in the past 10 years, including $11 billion in 2009, according to the International Air Transport Association. Airlines have been struggling with high fuel prices and a pullback in consumer spending amid a weak economy.


Shares of US Airways have risen 7.3 percent since news of the deal first broke on Wednesday, while United's shares have climbed 8.2 percent.
It is unusual for the potential acquirer's shares to rise during merger talks, and analysts have attributed UAL's rise partly to the sentiment that a deal would benefit both airlines, and partly to expectations that Continental Airlines (CAL.N) would approach United for a possible merger.
United and Continental got very close to a merger in 2008, but the talks fell through when Continental chose to pursue an alliance instead, sources had told Reuters at the time.
Now, investors are clearly expecting Continental to come back to the table for a merger, but it is unclear if the airline will make that move. Continental declined to comment.
Meanwhile, AMR Corp's (AMR.N) American Airlines, which had early-stage merger talks with US Airways and advanced alliance talks with Continental in 2008, has been sitting out the talks so far this year.
As such, the break-up fees are important as either United or US Airways could be approached by another carrier.
US Airways and United have tried to merge before: in 2000, they announced a $4.3 billion deal that fell apart on opposition from labor unions and the Department of Justice.
In 2008, sources had told Reuters that US Airways was in parallel talks with United and Continental about a possible merger.
The companies see more than $1 billion in synergies from a potential deal, the sources said.

Hmmm. Must be a typo. When I talked to Glenn the other day he told me he say $1 billion in executive bonuses from the potential deal.

The way I understand it, Glen will get a cash out, and Doug Parker will be doing a stock swap with Budweiser.
synergies....... Don't you just love that word? Now...... Tell me the first word or phrase that comes to mind.... I'll Start


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